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Come back to reality

Stay balanced and plan the next moves

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MC10 | Bankless Consulting

We had some interesting last few months to say the least: thousands of layoffs (Twitter, Facebook, Stripe, etc), crypto exchanges that went to hell (FTX), companies that tanked on the stock market (Tesla, Twilio, Atlassian, etc) and mega-funds that lost billions (Tiger, Sequoia, etc).

A swift comeback to reality will be healthy for everyone.

Grounding yourself into reality does not have to mean turning to pessimism, cynicism, or negativity. It means, quite literally, being realistic.

Being realistic implies not getting overwhelmed by irrational euphoria, by FOMO, by the trends of a moment, by the absurd idea that things can grow exponentially indefinitely.

In the last two years, we heard it all. We heard of paradigm shifts that would justify any price and heard of fantastic new technologies that would solve complex problems within a matter of weeks. Indeed, new technologies are undoubtedly going to solve complex problems - it just takes, you know, a lot of time, consistent action, and very few mistakes.

When you are building new stuff, more or less random swings have big impacts. Chaos can take over. Chaos, in dynamic systems, has a specific meaning. A system is so sensitive to certain conditions that even a small measurement error means you cannot approximately predict where the system will end up.

Chaos: when the present determines the future, but the approximate present does not approximately determine the future.

And so we find out that predictions are hard, that things happen, that what goes up must come down, and what sounded like some crazy hot fantasy is probably just that: a crazy hot fantasy. For the time being, at least.

We intuitively understand that maintaining long-term optimism for the future as an investor, an entrepreneur, or - more in general - as a human being is necessary. It is helpful for our well-being. It is essential for the very purpose of survival and progress.

It feels great to stay optimistic as all sorts of weird things unravel around you. Steve Jobs used to say that you cannot connect the dots by looking forward, you can only connect them by looking backward. So, in a way, you have to trust that the dots will somehow connect in the future.

But healthy optimism about the future does not have to come as a package with blindness. In absolutely no way, staying optimistic should mean getting crunched by the folly of others or unintentionally succumbing to peer pressure because, say, it’s fashionable.

Mark Zuckerberg, Elon Musk, or Alex Mashinsky will die a billionaire anyway. The software engineer from Silicon Valley who got fired yesterday will find another great job tomorrow. Samuel Bankman-Fried and his clique have been living between Antigua and Barbuda and The Bahamas for a while. They’ll all be fine.

But what are you going to do?

Why are you surprised?

What are you going to do now if you had bet everything on the wrong horse, the wrong exchange, the wrong token, the wrong company, or the wrong individual?

These are basic concepts in the world of business and investing. In general, they are basic ideas of human existence, although every now and then we get a reminder that most people appear to be candidly unaware of those very same ideas. These tenets are certainly hard to apply in practice - I’ll give you that.

In fact, what is truly, utterly strange is not that very normal and cyclical episodes such as layoffs, recession or bankruptcies happen, but that many (even amongst those who do not lack education and gray matter) are surprised by those when reality inevitably hits!

It took me a while to realize this: if you keep fighting reality you are bound to lose, but only 100% of the times.

With inflated expectations come large disappointments, I guess.

Those who are suffering the most in these temporarily unfavorable circumstances, both from a financial and a psychological standpoint, are missing the chance to play on the attack. They are missing the opportunity to invest, to build, and to lay the foundations for the next decade of progress and advancement. I wish them all the best and I hope they’ll be able to recover.

What are you supposed to do right now?

I don’t know.

DYOR, not financial advice, etc but I know what I am doing.

Investing and building, head down and without proclamations, with the peace of mind of who had not been carried away by fashionably fantastic trends when everything seemed easy. 

A handful of things are truly important right now: balance, independent thinking, maintaining a positive outlook.

Conclusive Thoughts

Optimism helps us make sense of our lives and it keeps us thriving.

Fantasy can sometimes help us in picturing big hairy goals that are much larger than ourselves.

Dreaming of accomplishing those goals is a source of motivation.

Reality, eventually, kicks in. Some sort of reset happens that separates the dreamers from the doers, the ones who were hooked in by mistake from the ones that are going to make it happen no matter what.

Think of where you want to stand, and plan your next moves.

"Be fearful when others are greedy, and be greedy when others are fearful."

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